Saturday, 31 January 2009

China is unlikely to replace the U.S. as the world's dominant superpower, says George Friedman, CEO of Stratfor. He tells Kirby Daley from the Newedge Group & CNBC's Amanda Drury why. He also reveals the other key challenges we may face in the next 100 years.

Thursday, 29 January 2009

The global economy will likely slow to a “virtual standstill” this year, but a recovery should begin by the end of the year if the right policy actions are taken, the chief economist of the International Monetary Fund said Wednesday.

New US Treasury Secretary Timothy Geithner kicked up a right old stink last week when he told his Senate confirmation hearing that “President Obama... believes that China is manipulating its currency.”

Wednesday, 28 January 2009

The past year has been challenging for Singaporeans, with many witnessing job losses, pay cuts and stocks losses first-hand. The reality, reflecting a rise of anxiety and depression cases could not be truer.

[Dow Jones] Singapore banks are best avoided for now as Singapore is confronting its deepest recession ever with economy expected to contract 3.5% in 2009, says Morgan Stanley. “A small open defenseless economy lacking indigenous domestic demand, the worst is to come,” warns broker. Expects Singapore bank sector earnings to decline 20% in FY09 and not recover until at least 2011, warns asset quality is key stress point, cycles generally last two years. Adds while valuations look undemanding, consensus earnings estimates still too optimistic. Reiterates Cautious view on sector, rates all 3 banks Underweight with OCBC (O39.SG) and UOB (U11.SG) least preferred as says they trade at a premium; “stay Underweight and play the relatives in what looks like an ugly range-bound year.” OCBC last +2.2% at S$5.03, UOB +4.0% at S$12.00 vs STI +3.7%. DBS (D05.SG) outperforming, +6.4% at S$8.92; trader at local house says stock looks oversold, hopes of further U.S. bailout measures offering support.

The economic crisis came home to 27-year-old Megan Petrus early last year when her boyfriend of eight months, a derivatives trader for a major bank, proved to be more concerned about helping a laid-off colleague than comforting Petrus after her father had a heart attack.

As the global financial crisis takes hold on China’s economy, eroding domestic and international demand, the government is hoping to boost consumption and help the crisis-hit IT industry by subsidizing computer purchases by rural households that have thus far been sidelined in the expansion of new technologies.

The top three Chinese automakers in terms of sales volume took 48.7 percent of the domestic market in 2008, up 1.8 percentage points year-on-year, the China Association of Automobile Manufacturers (CAAM) said in a report.

Raising the stakes in a showdown over Swiss banking secrecy, U.S. prosecutors have given UBS “several weeks” to hand over scores of American client names or ultimately face potential indictment over its offshore banking services, a person briefed on the matter said Monday.

Stocks will retreat around the world because of shrinking demand from China as growth in the third-biggest economy slows, said Nouriel Roubini, the New York University professor who predicted last year’s financial crisis.

China is in a recession despite government statistics today showing the world’s third-largest economy expanded in the fourth quarter from a year earlier, according to Nouriel Roubini, the New York University professor who predicted last year’s economic crisis.

2008 has been a tumultuous year in Asia marked by the deterioration of exports and a collapse in many regional asset markets as the global recession worsened and leveraged investors withdrew. Hopes that Asia would “decouple” were, as we feared at the start of 2008, overly optimistic, as Asia’s domestic demand remains strongly correlated with exports and global liquidity. Growth and industrial production are now slowing sharply in many Asian economies and we fear the outlook will worsen in the first half of 2009.

Investors might also note the latest calculations by New York University professor Nouriel Roubini, who correctly predicted the present crisis more than a year ago. In his latest RGE Monitor blog, Prof Roubini states that the banking losses from the US sub-prime crisis can hit US$1.6 trillion, of which the US financial system’s share is US$1.1 trillion, far exceeding current estimates. As a result, he concludes that US banks are ‘borderline insolvent’.

One was a tall Caucasian man and his partner was a petite woman who looked to be Japanese, according to the forum user. They were both wearing footwear and the girl was carrying a slingbag - but they were both not wearing any clothes.

But now, when business is very slow indeed and the possibility of layoffs icily real, looking busy is no joke. In retail and real estate, restaurants and law offices, many American workers are working hard to look necessary, even when they don’t have all that much to do.

The hydroelectric dam, a low wall of concrete slicing across an old farming valley, is supposed to help a power company in distant Germany contribute to saving the climate - while putting lucrative “carbon credits” into the pockets of Chinese developers.

Unlike US banks, hedge funds haven’t been lining up for government bailouts in the wake of losses they can’t handle. But the funds do share one Wall Street problem: a massive mismatch between the short-term funds they take in and the long-term bets they make. Without a rethink of their business models, many in the hedge fund business risk going the way of the investment banking dodo.

Equipment is moved last month at the shuttered Jianglong Group (China Printing & Dyeing) factory in Shaoxing, China. The textile dye firm was abandoned by the owner. Government officials said recently that he and his wife had been caught.

Last week’s breakdown below the lower confine of a congestion zone changed the short-term neutral bias to a negative one. The HSI thereby closed below the intermediate-term uptrend line as well, raising the odds of a following significant decline. It would take a decisive recapture of the 14,200/14,300 area to negate the negative outlook and identify this recent drop as a false break and bear trap. Minor resistance is seen at 13,675 and then 14,000. Next potential downside targets and support levels are 12,439, 11,815 and 10,676.

Every new year, I adopt a couple of old maxims as my beacons to guide my future. This self-prescribed therapy has ensured that with each passing year, I grow wiser and not older. This year, I invite you to tap into the financial wisdom of our elders along with me, and become financially wiser.